The miners are actually handing over more of their revenues to governments, albeit in the form of increased royalties to state governments rather than MRRT to the federal government. The Gillard government has been unable to convince the states – the actual owners of the resources concerned – to freeze royalty rates. So a deal with the states is necessary. The government can try to use the distribution of GST and other revenues as either a carrot or stick to convince them to play ball.

The issues is one of federalism. Those states with large resource bases are quite hostile to the notion that they should give up their revenue and autonomy in response to either threats or promises from Canberra to ensure a more equitable distribution of wealth across the states.